How is Trump Effecting Mexican Trade?

How is Trump Effecting Mexican Trade?

Mexico’s economic outlook was under a wave of uncertainty when Trump pledged to get rid of the North American Free Trade Agreement (NAFTA) during the campaign of his presidency. The new POTUS also threatened to impose a border tax on Mexican-made goods, which sent the Mexican peso to a record low in January. Despite the insecurity the Mexican people faced with Trump rhetoric potentially bringing their markets down, Mexican officials have been proactive in securing their nations prosperity and longevity in the global marketplace. Here is what Mexico has been up to recently.

Mexican Trade Deficit Narrows as Exports Increase

Mexican economy grew by 3.0 percent in 2016 (Unadjusted terms)

Other positive global market trends show that Mexico experienced another increase in factory exports for its 4th consecutive month. This surge helped narrow Mexico’s trade deficit with the rest of the world from USD$736 million in January to USD$398 million in February.In February of this year, Mexico declared a trade surplus of USD$684 million, the largest surplus they have experienced in almost two years. In its 5th consecutive month of expansion, in January, the economy saw a 0.3 percent increase from the previous month. This is a better than expected growth figure considering the negative forecasts the country faced after a Trump presidency was to take place. Low oil prices drag the economy down in regards to Mexican output from the oil industry, but steady growth in the service and agricultural sectors more than make up for it.

Furthermore, according to NASDAQ, manufactured exports and non-oil consumer good imports rose by 3.6 percent and 6.8 percent respectively, in adjusted terms. Interestingly, the Mexican economy seems to be doing well amid the uncertainty that plagues the economy. Much of this is accredited to the strategies and policies being placed by Mexican officials who are determined to keep their economy afloat. Their potential partnerships with Brazil, Argentina, and India will cause a rift in the global marketplace that is sure to benefit this emerging economy.

Mexico Seeks New Corn Importer Amidst NAFTA Negotiations

Corn imports by Mexico from the U.S. were worth USD$2.3 billion in 2015

Understandably Mexicans are looking to move away from importing the product from their now unpredictable neighbor ; Trumps eagerness to renegotiate NAFTA has corn buyers in Mexico worried and exploring other options. In their endeavors to sustain their nation with the product, Mexico is currently drafting trade agreements that offer Brazil and Argentina duty-free access to the Mexican market for corn. Mexico is the world’s largest buyer of U.S. corn and currently imports 98 percent of the product from the United States. According to theNational Association of Farm Broadcasting news service, “Total U.S. farm sales to Mexico were worth an estimated USD$17.7 billion last year, five times greater than when NAFTA came into force.” The broadcast also mentioned statistics from The U.S. Department of Agriculture that says “corn imports by Mexico from the U.S. were worth USD$2.3 billion in 2015.”

India Driving Mexican Economy Upwards

This is noteworthy given the fact that Mexico is the fourth largest exporter of vehicles in the world and exports a total of USD$80 billion of the product.India is quite literally paving the way for Mexican prosperity ; the 2nd strongest Latin American economy has recently emerged as the biggest market for India’s vehicle exports. Mexico accounts for 13 percent of India’s global exports of vehicles, which by the end of 2016, stood at USD$14.98 billion.

Most notably, India’s vehicle exports to Mexico have increased by a whopping 56 percent from 2015 and an even greater 83 percent from 2014. This trend shows a strategic partnership between the two powerful nations that is sure to accelerate the Mexican economy in the near future. Another sign of the powerful economic alliance is that India is the third largest destination for Mexican crude exports. India also imports large quantities of other items from Mexico such as:

Engineering products, ($593 million)

Gold ($77million)

Chemicals ($76 million)

Optical products ($57 million)

Ores ($54 million).

Despite its challenging adversary in the north, Mexico has shown its tenacious spirit in the fight to continue as an emerging economy in the global marketplace. They continue to show interest in other foreign direct investors so that they can become less dependent on the United States. Their calls for alliances have not been ignored, and other nations have swung their doors open so that they can take advantage of possible new partnerships within the country. As Mexico slowly distances itself economically from the United States, new opportunities in international trade and business open up for other potential investors.

To learn more about the Mexican economy, the business opportunities to form a company in Mexico, and how you might take advantage of these global market shifts, please reach out to Alexander Mahoney at[email protected]